Home-working to cut office costs is the right answer to the wrong question.
Focusing on the wrong issues is nothing new. There will always be managers who blindly follow the latest management fashion.
Take downsizing. It became popular in the mid-1980s. Between 1987 and 1991, 85% of America’s biggest companies downsized their headcount. The rationale for downsizing was to raise productivity, by bringing in more efficient processes and the better use of technology.
Companies lost their way. Managers focused on cutting jobs and costs, instead of productivity increases. Excited by the big costs reductions (which boosted short-term profits), the managers went too far with the red pen. Too many people were laid off. Delta Airlines famously left themselves without enough baggage handlers. AT&T offered early retirement to reduce its headcount. More employees accepted the offer than AT&T had planned, leaving the company short of people with critical skills.
Rightsizing replaced downsizing. Companies increased headcount because managers had misunderstood the purpose of downsizing. They’d put cost reduction before productivity gains.
We smile at the examples of Delta Airlines and AT&T. Yet many companies are about to repeat the mistake with remote working.
Your employees work for the 3 S’s
The primary reasons for being employed are status, salary and security. Secondary reasons are, depending on the individual: the challenge, personal growth, expertise, and autonomy.
To understand why status, salary, and security are so important, look at what happens when these reasons go, as they do at the end of working life. When a person retires, what do they miss the most? The status of their job: saying they work in a well-known company or industry. The salary: because pensions and normally lower which reduces their purchasing power. And while retired people are free to choose what they do, many people are nervous about having no structure to their day. The security of a clearly defined role has gone.
Status, salary, and security are still the primary reasons for being employed.
Only a handful will actually quit because of remote working
When hot-desking came into fashion, a few people were shocked that there was nowhere to put their plant and photos. Even so, only a few were so upset that they actually quit. People got used to hot-desking.
It’s the same now with remote working and home-working. It’s a change. It’s different.
The idea of employees walking out en masse because they don’t have an office is a fantasy. It the current economic climate, no more than a handful of employees will leave their job because of it.
More importantly, managers spending time on this are focusing on the wrong question. The issue is what being in an office brings, not how to cut office costs. Offices are hubs of vital activity, like global business hubs are.
Global hubs – like London and New York for finance – exist for good reasons
Financial trading is done online. You can trade from anywhere in the world. So why do thousands of workers flock into global financial hubs like New York and London? The answer gives managers clarity about the purpose of offices. According to research, the top five answers for working in the City of London are:
- Career growth and job prospects – status, salary, and security.
- Access to highly-skills people and support services – knowledge transfer.
- Reputation of working in a top location – status (London looks better on your CV than Liverpool).
- Ideas and creativity spread faster – innovation and knowledge transfer.
- Doing business with people we know and like – trust.
The sky-high costs of having an office are not actually a major factor.
Remote working must replace the factors lost when we are farther away from other people.
The right question is one that my clients have answered. And it’s this: when people in our company work remotely, how do we boost their:
- sense of security and trust,
- the (formal and informal) ways to share know-how and ideas, and
- pay them a decent salary?
The lesson from 1980s downsizing is to get the focus right: productivity, not costs. Cost reduction was a total distraction. Sadly, some senior managers risk making the same mistake with the mass introduction of remote working.